Heartland Financial USA (HTLF) Q2 2024 earnings summary

Executive summary

• Net income available to common stockholders was $37.7M ($0.88 per share) for Q2 2024, down 20% year-over-year; adjusted earnings were $49.6M ($1.15 per share), up from $46.5M ($1.09 per share).

• Net interest income rose 8% to $158.7M; net interest margin improved to 3.68% (fully tax-equivalent 3.73%).

• Sale of all nine Rocky Mountain Bank branches in Montana closed in July, with $348.8M in loans and $538.3M in deposits moved to held for sale; $30M gain expected in Q3 2024.

• For the first half of 2024, net income available to common stockholders was $87.4M, down 11%; adjusted earnings were $102.0M, up 2%.

• Integration planning with UMB Financial is ongoing, with the merger expected to close in Q1 2025.

Financial highlights

• Total assets at June 30, 2024: $18.81B (-3% YTD); total loans held to maturity: $11.61B (-4% YTD); total deposits: $14.96B (-8% YTD).

• Noninterest income fell 44% to $18.2M, mainly due to $10.1M in securities losses and lower capital markets fees.

• Noninterest expenses rose 6% to $116.2M, driven by higher salaries, professional fees, and acquisition/integration costs.

• Allowance for credit losses on loans was $126.9M (1.09% of loans), up from $122.6M at year-end.

• Book value per common share: $44.74; tangible book value per share: $30.94.

Outlook and guidance

• Management expects to utilize the $30M gain from the Rocky Mountain Bank sale in Q3 2024 to offset potential future losses from securities or real estate sales.

• Focus remains on improving operational efficiency and managing deposit costs amid competitive pressures.

• Net interest margin may be impacted by market pressures to increase deposit pricing; management anticipates using investment portfolio cash flows to pay down wholesale deposits and borrowings.

• Integration with UMB Financial is ongoing, with the merger expected to close in Q1 2025.